Banco BPM itself was only created in 2017 from the merger of the Volksbanken of Milan and Verona.
(Photo: Reuters)
Rome Apparently, the next big takeover is about to take place in Italy’s banking market: Rumors have been growing since the weekend that the major Milan bank Unicredit wants to buy Banco BPM. It would be a huge deal: Italy’s number two would swallow number three. “We didn’t get anything concrete,” explained Banco BPM boss Giuseppe Castagna at the weekend.
The Hypo-Vereinsbank parent company Unicredit has not yet confirmed the speculation either. But the recent announcement that the bank is “considering options” consistent with the business plan is anything but a denial.
The Italian banking market, which was once highly fragmented, has been consolidating for several years: just a year and a half ago, the major bank Intesa Sanpaolo and its medium-sized competitor Ubi Banca merged. The savings bank from Genoa (Carige) is currently about to be taken over by the Volksbank der Emilia-Romagna (BPER) – together they would be the fourth largest bank in the country.
Banco BPM itself is still a very young construct: It was only created in 2017 from the merger of the Volksbanken from Milan and Verona, and is now the third largest bank in the country after Intesa and Unicredit. It employs around 22,000 people, has around 1,800 branches and four million customers. The group is primarily present in northern Italy, in the economically strongest regions of Lombardy and Veneto.
Top jobs of the day
Find the best jobs now and
be notified by email.
Especially in Lombardy, the region around Milan with numerous large companies and affluent private customers, Unicredit has recently lost a lot of market share, and after the Intesa-Ubi merger it is only in fourth place among the branches. Banco BPM has a market share of 14 percent there, while Unicredit has only had seven percent so far. In Piedmont, the region around Turin, Unicredit would grow from the current 13 to 24 percent market share, in Veneto from 13 to 22 percent.
Unicredit boss Andrea Orcel looking for the big deal
For the new Unicredit CEO Andrea Orcel, the takeover would be his first big deal. He has been in power in Milan for ten months. His clear goal: to digitize the European banking group, but also to strengthen the home market, to become more present in the country, also through takeovers.
Orcel failed with one last fall. At that time, negotiations with the Italian Ministry of Finance about a partial sale of the nationalized crisis bank Monte dei Paschi di Siena (MPS) broke down. The smaller bank from Tuscany apparently had too many risks in its portfolio for Orcel.
In order to reduce them, the investment banker is said to have demanded a substantial capital increase from the state. However, the government was not willing to do this, and the urgent search for a buyer for MPS continues. Unicredit recently withdrew from the bidding process for Russia’s Otkritie Bank, officially due to geopolitical tensions between Russia and Ukraine.
Unicredit has also been considered a potential candidate for a takeover of Commerzbank for years. But even before the news about BPM, insiders considered an offer for Germany’s second-largest private bank to be increasingly unlikely.
This cools the merger fantasy around Commerzbank even further. The US financial investor Cerberus has started to sell its stake in the Frankfurt money house, and no new venture is expected from other major European banks such as the French BNP and the Dutch ING.
Acquiring Banco BPM would be a pretty expensive proposition for Unicredit. In contrast to MPS, it is in a very good financial position, only a few days ago it announced the best balance sheet in the company’s history: adjusted net profit last year was 710 million euros, more than twice the 330 million in 2020. Sales rose by 8.6 percent year-on-year to EUR 4.5 billion. In return, the proportion of non-performing loans was reduced: it is now 5.6 percent, a year ago it was 7.5 percent.
The analysts at Swiss UBS consider the possible takeover to be “a strategically sensible transaction in view of the geographic complementarity” and the cost restructuring, which would also have a positive effect on Unicredit shares.
More: Sanctions, cyber attacks, credit risks – the political conflict with Russia is increasingly making bank supervisors in Europe nervous